Huffington Post: Law Schools in the Dock

From Law professor Bennett Gershman’s regular column on the Huffington Post:

Have the nation’s law schools been cheating their students? Have the nation’s law schools been engaged in an ongoing fraud by misrepresenting the value of a legal education? Have law students accepted law school offers based on a law school’s false or misleading representation of job opportunities upon graduation?

That is the essence of nearly a dozen complaints filed against law schools recently by graduated students who claim they were taken in by false solicitations from their law school’s marketing materials containing inflated and sometimes false data about employment opportunities upon graduation. These students paid high tuitions, often with borrowed money, and now are without work and competing for increasingly scarce law jobs, and who face the bleak prospect of crushing debt with little hope of relief. At least, that’s what these complaints allege. The plaintiff’s complaint quotes Richard Matasar, New York Law School’s dean, who asserts that law schools deans “should be ashamed of ourselves.” “We own our students outcomes. We took their money, and if they don’t have a good outcome in life, we’re exploiting them.”

The students’ complaint alleges that for several years, New York Law School (and other law schools in other parts of the country) represented in its marketing materials to prospective students that between 90 and 92 percent of its graduates secured employment within nine months after graduation. A student contemplating enrolling in the law school might actually believe that these numbers represented full-time permanent law positions for which a law degree is necessary. However, these numbers included jobs that had nothing to do with the legal profession, but included, for example, a saleswoman in a department store, a legal secretary, and unemployed graduates hired by the law school as “research assistants.”

Along with this solicitation, New York Law School charged a very high tuition, more than double from $22,900 in 2000 to the current $47,800. According to the U.S. News rankings of law schools nationwide, New York Law School ranks 135th, but it ranks in the top 10 law schools with the highest average indebtedness of graduating students, at over $146,000.

But New York Law School is not alone in the way it represented job prospects to prospective students. Many law schools apparently used inflated job numbers and salaries to attract students. And in the aftermath of the Great Recession, the contraction in the demand for legal services has been unprecedented. Hiring at many firms has been suspended; law firms are splitting up and downsizing; new billing arrangements are limiting the need for more lawyers. So, the legal question is whether law schools operating in this economic maelstrom are guilty of fraudulent conduct by deceiving students as to the “true value” of a law degree?

Law schools for now can breathe easier. Last week in New York State Supreme Court, the complaint against New York Law School was dismissed by Justice Melvin Schweitzer. The judge focused heavily on how a reasonable student would understand the law school’s data about post-graduate employment and salaries when making a decision to attend that law school. The legal test, according to the court, is not whether the law school made misleading representations that may have deceived prospective students. Rather, the test is whether the representations, even if misleading, were material or important enough that a reasonable student acting reasonably would be duped by the come-on.

The court found that reasonable consumers — college graduates — who were seriously contemplating going to law school are a “sophisticated subset of education consumers, capable of sifting through data and weighing alternatives before making a decision regarding their post-college options.” The court noted that these reasonable consumers have available to them a wide variety of sources of information to consult before deciding whether to apply to a professional school. Given the impact of the recession on the legal job market, prospective law students acting reasonably would have to know that dramatic changes in the economy would likely impact the legal profession and their chance of getting a job upon graduation.

Did students rely on the law school’s misleading employment and salary data that appeared from 2005-2009 on the law school’s website, in its marketing materials, and in publications by third-party clearinghouses? The court suggested that the students may have relied on this information to their detriment, but once again, as the court noted, their reliance must have been reasonable. They had ample opportunity to learn from numerous sources about their post-graduation employment prospects; it was not reasonable for them to confine their research and reliance to a few sentences in the law school’s marketing materials.

Whether any of these complaints have any merit legally is questionable. But the other big question is whether the law school industry for several years has been manipulating its job numbers to compete in an increasingly over-saturated market for lawyers, and whether the market forces will correct themselves any time soon. Transparency is critical. U.S. News in making its rankings will demand much more transparent employment data. The American Bar Association has recently enacted guidelines to require law schools to report true post-graduate employment statistics. And law schools will much more carefully review and report data that represents the truth. To be sure, the reality is that consumers of a legal education may not all be the “sophisticated consumer” that the court in the New York Law School law suit described. But even if unsophisticated, they bear the risk. As the old, and discredited, saying goes: “Let the Buyer Beware.”